Platform for Collaboration on Tax

Overview

The Platform for Collaboration on Tax is a joint effort launched in April 2016 by the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the United Nations (UN) and the World Bank Group (WBG). The Platform is designed to intensify the co-operation between these International Organisations (IOs) on tax issues. It formalises regular discussions between the four IOs on the design and implementation of standards for international tax matters, strengthens their ability to provide capacity-building support to developing countries, and helps them deliver jointly developed guidance. It also increases their ability to share information on operational and knowledge activities around the world.

This effort comes at a time of great momentum around international tax issues, and was welcomed by the G20 finance ministers at their February 2016 meeting in Shanghai. Amid the growing importance of taxation in the debate to achieve the UN Sustainable Development Goals (SDGs), a major aim of the Platform is to better frame technical advice to developing countries as they seek both more capacity support and greater influence in designing international rules.

Among the Platform's tasks are to deliver a number of publications designed to help developing countries implement the measures developed under the G20/OECD Base Erosion and Profit Shifting Project (BEPS) among other international tax issues. There is an important link between this work and the Inclusive Framework on BEPS. Platform members hold regular meetings with representatives of developing countries, regional tax organisations, banks and donors. Consultations with business and civil society are organised as needed.

In February 2016, G20 Finance Ministers called upon the IMF, OECD, UN and World Bank Group to "recommend mechanisms to help ensure effective implementation of technical assistance programmes, and recommend how countries can contribute funding for tax projects and direct technical assistance, and report back with recommendations" at their July meeting. The four organisations – drawing on their individual experiences in delivering technical advice and their interactions with other providers of technical assistance, development partners, and especially country governments – developed a series of recommendations and enabling actions in response to this request.

The recommendations in this report further benefitted from a public request for feedback on draft recommendations which attracted responses from governments, businesses, civil society and individuals.

TOOLKITS

The OECD is working with developing countries, the IMF, the World Bank Group and the UN along with regional tax organisations to address the top priority BEPS issues identified by developing countries in a two-part report published in 2014. This work was mandated by the G20 Development Working Group in response to the 2014 report, and is aimed at ensuring that developing countries can benefit from the outcomes of the BEPS Project, as well as from practical solutions to the BEPS-related challenges that these countries are facing, like wasteful tax incentives.

The outcomes of the BEPS Project delivered in 2015 change the international taxation environment, and as a consequence 2016 and 2017 will be focused on implementation, including on the development of practical tools for developing countries in the following areas :

Low income countries often face acute pressures to attract investment by offering tax incentives, which then erode the countries' tax bases with little demonstrable benefit in terms of increased investment. The Platform partner organisations were asked to use their shared expertise — based on many years of country interactions and analysis—to assist low income countries in making better use of tax incentives.

Drawing on recent country experiences and an extensive range of studies, the IOs prepared this toolkit aiming to take a fresh look at tax incentive policies in low income countries. The toolkit offers guidance on the design and governance of tax incentives and suggests good practices. Since much of the pressure to offer incentives stems from an awareness of those offered by other countries, the toolkit also discusses options for international coordination to address the risk of mutually damaging spillovers from such tax competition.

A separate background document is also available, which reviews practical tools and models that can help assess the costs and benefits of tax incentives. This is essential to enhance transparency and support informed decision making.

The toolkit responds to a request by the Development Working Group of the G20, and addresses an area of tax called "transfer pricing," which refers to the prices corporations use when they transact between members of the same group. How these prices are set has significant relevance for the amount of tax an individual government can collect from a multinational enterprise. The toolkit specifically addresses the ways developing countries can overcome a lack of data needed to implement transfer pricing rules. This data is needed to determine whether the prices the enterprise uses accord with those which would be expected between independent parties. The guidance will also help countries set rules and practices that are more predictable for business. Since the pricing of transactions between related parties in the extractive industries is an issue of particular relevance to many developing countries, the toolkit also addresses the information gaps on prices of minerals sold in an intermediate form (such as concentrates).

The toolkit has been updated following comments on a consultation draft which was made public in January 2017. It will soon also be available in French and Spanish.

The tax treatment of 'offshore indirect transfers' (OITs) — the sale of an entity located in one country that owns an "immovable" asset located in another country, by a non-resident of the country where the asset is located — has emerged as a significant concern in many developing countries. It has become a relatively common practice for some multinational corporations trying to minimise their tax burden, and is an increasingly critical tax issue in a globalised world. But there is no unifying principle on how to treat these transactions, and the issue was not addressed in the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. This draft toolkit, The Taxation of Offshore Indirect Transfers – A Toolkit, examines the principles that should guide the taxation of these transactions in the countries where the underlying assets are located. It emphasises extractive (and other) industries in developing countries, and considers the current standards in the OECD and the U.N. model tax conventions, and the new Multilateral Convention. The toolkit discusses economic considerations that may guide policy in this area, the types of assets that could appropriately attract tax when transferred indirectly offshore, implementation challenges that countries face, and options which could be used to enforce such a tax.

The Platform partners now seek comments by 25 September 2017 from all interested stakeholders on this draft. Comments should be sent by e-mail to taxcollaborationplatform@worldbank.org, a common comment box for all the Platform organisations. Spanish and French language versions of the toolkit are forthcoming and will also be posted for comment. The Platform aims to release the final toolkit by the end of 2017.